Q1 ACCT 211-02, winter 2018 Name: ID#: P-1. Prepare any necessary journal entrie

Question

Q1 ACCT 211-02, winter 2018 Name: ID#: P-1. Prepare any necessary journal entries for the following merchandising transactions: On 7/2, purchased inventory at $70,000 in cash. On 8/1 sold inventory costing $10,000 for $17,000 on credit, 2/20, n/60. On 9/1, received the full payment for the transaction on 8/1. P-2. The following information is the adjusted trial balance of Coyote Company for the year ended on 12/31/2017: DebitCredit Cash Accounts receivable Inventory Prepaid insurance Equipment Accumulated depreciation-equipment Accounts payable Unearned service revenue Common stock Retained earnings Sales revenue Rent revenue Salaries and wages expense Utility expense S1,560 2,100 3,120 90 300 50 80 120 210 6,610 270 50 160 Total $7,390 S7.390 Instructions: Prepare 1. Income statement for the year ended on 12/31/2017, 2. Statement of retained earnings for the year ended on 12/31/2017, and 3. Balance sheet as of 12/31/2017.

Explanation / Answer

P-1 Journal Entry

7/2            Purchase of inventory A/c Dr         $70000

                      To cash A/c                       $70000

      (Inventory purchase in cash)

8/1              Debtor A/c Dr               $17000

                    To Sales A/c Cr.                  $17000

            (Goods sold on Credit)

                 Sales A/c Dr.                     $17000

                   To COGS A/c                         $10000

                   To Profit on sales                    $7000

     (profit transfer to Profit and loss account)

9/1

                    Cash A/c       Dr.       $16660

                    Discount A/c Dr .       $340

                       To Debtors                             $17000

Ans. P2

                                  Income Statement for the year ended 12/31/2017 ( in $)

Revenue

Sales      270

Rent                  50

Less:

Salary and wages exp           (160)     

Utility exp.                                  (60)

Profit for the year                          100

2.              Statement of Retained Earning

Opening Balance of Retained Earning :                  6610

Add: profit during the year                                     100

ClosingBalance of retained earning     : 6710

3. Balance Sheet as of 12/31/2017

Shareholder Fund

Common stock    :    210

Retained Earning : 6710

Non Current Liability

Current Liability

Account payable                                       : 80          

Unearned income                                      :             120  

Total                                                (A)    :             7120

Non Current Assets

Equipment (300-50)                                                   250

Current Assets

Prepaid Insurance                                                     90

Account receivable                                                  2100

Inventory                                                                3120

Cash                                                                     1560

Total                                                           (B) : 7120

                  

   

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